Question 1

Which of the following partnerships is distinguishable from other forms of partnership because the partners' liability for professional malpractice is limited to the partnership?

Accepted Answer

Limited Liability Partnership (LLP) is unique among partnership forms because it allows partners to have limited liability for the actions of other partners, specifically including protection from liability for professional malpractice committed by other partners, with the liability being limited to the partnership itself.

Question 2

Who is responsible for managing the business of a corporation?

Accepted Answer

Members of the board of directors are responsible for overseeing and managing the business affairs of a corporation. They make major decisions and set policies for the company.

Question 3

________ are responsible for running the day-to-day business of a corporation.

Accepted Answer

Officers are responsible for the day-to-day operations of a corporation, executing the strategies and policies set by the board of directors.

Question 4

DirtyBike Manufacturer manufactures dirt bikes in Cleveland, Ohio. DirtyBike gives an exclusive license to Paul's Dirt Bikes in Oklahoma City, Oklahoma to sell the bikes. This is an example of:

Accepted Answer

A distributorship involves a manufacturer (DirtyBike Manufacturer) granting a seller (Paul's Dirt Bikes) the right to sell its products, which is the arrangement described.

Question 5

Which of the following statements is false regarding a limited partnership?

Accepted Answer

A limited partnership must have at least one general partner and at least one limited partner, not necessarily at least two limited partners.

Question 6

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership.
-In the absence of an express agreement, which act governs partnerships in most states?

Accepted Answer

The Uniform Partnership Act (UPA) governs partnerships in most states in the absence of an express agreement between the partners.

Question 7

Which of the following statements is false regarding limited liability companies?

Accepted Answer

Owners of an LLC are referred to as "members," not "incorporators." Incorporators are associated with the formation of corporations, not LLCs.

Question 8

Which of the following is a partnership agreement in which company members hold transferable shares, while all the goods of the company are held in the names of the partners?

Accepted Answer

A joint stock company is characterized by a partnership agreement where members have transferable shares, and all company assets are held in the names of the partners. This structure combines elements of both partnerships and corporations.

Question 9

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership.
-Which of the following is not a type of partnership?

Accepted Answer

A Limited Liability Company (LLC) is not a type of partnership; it is a distinct legal entity that combines elements of partnerships and corporations.

Question 10

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership.
-In a ________ the general partners assume unlimited personal liability for the partnership debts, however, the limited partners assume no liability beyond the capital they invested and have no part in the management.

Accepted Answer

In a limited partnership, general partners have unlimited personal liability for the partnership's debts, while limited partners' liability is limited to their capital investment and they do not participate in management.

Question 11

What was the result in Patterson v. Dominos' Pizza, LLC, the case in the text addressing whether a franchisor can be held vicariously liable by a franchisee's employee for sexual harassment, retaliation, and tort claims?

Accepted Answer

The case was remanded to the trial court to determine whether the franchisor stands in an employment or agency position in relation to the franchisee and its employees, in order to determine if the plaintiff-employee can pursue her claims against the franchisor.

Question 12

Assuming all other requirements are met, which of the following entity can avoid double taxation?

Accepted Answer

S corporations are designed to avoid double taxation. They pass their income, losses, deductions, and credits directly to their shareholders, who then report these figures on their personal tax returns, thus avoiding the corporate income tax level.

Question 13

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership.
-Which of the following statements is false regarding a general partnership?

Accepted Answer

General partners in a partnership have personal liability for the debts and obligations of the partnership, contrary to the statement in option E.

Question 14

Which statement is true regarding S corporations?

Accepted Answer

S corporations are indeed formed under state law, similar to C corporations and other business entities. They must adhere to the specific laws and regulations of the state in which they are incorporated.

Question 15

When a group decides to organize for the purpose of pooling their resources to gain a market advantage, this is known as a(n) ________.

Accepted Answer

A cooperative is an organization where individuals pool their resources to gain a market advantage, often for mutual benefit.

Question 16

Which statement is true regarding corporations?

Accepted Answer

Corporations are recognized as separate legal entities from their owners, allowing them to own property, enter into contracts, and be sued. They are typically created under state law, not federal law. Shareholders generally have limited liability, meaning they are not personally liable for the debts of the corporation. The statement about taxation, known as double taxation, is true: corporations pay taxes on their profits, and shareholders pay taxes on the dividends they receive, which are distributed from those profits.

Question 17

What was the result in Meyer v. Christie, the case in the text involving whether an agreement to enter into a joint venture existed?

Accepted Answer

The answer of What was the result in Meyer v....

Question 18

What is the correct term for the investor-owners of a corporation?

Accepted Answer

Shareholders are the correct term for the investor-owners of a corporation, as they hold shares of the company's stock, representing ownership.

Question 19

A limited liability company offers the tax advantages of a ________ and the liability advantages similar to a ________, while also allowing for unlimited shareholders.

Accepted Answer

A limited liability company (LLC) combines the tax advantages of a partnership, where profits and losses can pass through to the owners without being taxed at the company level, with the liability protection similar to that of a corporation, which limits the owners' losses to their investment in the company.

Question 20

________ adopted the limited liability company model of Germany.

Accepted Answer

The answer of ________ adopted the limited liability company model...

Quiz 35: Forms of Business Organization